Tuesday, February 13, 2007

More thoughts on the Fireside Bank oral argument

On January 30, I posted a summary of the Fireside Bank oral argument, which a reader who attended the argument kindly provided. Another reader who also attended the argument subsequently emailed me with some more thoughts about the argument:

I was interested in seeing the observations one of your readers sent about oral argument before the Supreme Court last week. I think the reader generally got the gist of both the argument and the Court’s questions, but I hope that reader’s prediction about the outcome is wrong.

Your reader missed one central [fact about the underlying case]. The trial court ruled on [the plaintiff's] motion for judgment on the pleadings (MJOP)—which the trial court said would be off-calendar but was decided anyway—at the same time it granted [the plaintiff's] motion for class certification. The MJOP ruling itself was a mistake which no one expected. That ruling was what Fireside claimed was the impermissible one-way intervention.

But [the plaintiff's] MJOP only tested the validity of Fireside’s collection complaint against [him]. The validity of the class claims—[the plaintiff's] cross-complaint against Fireside—were never litigated or determined. Thus, the [plaintiff's] central [argument was] that the “rule” against one-way intervention only applies when the class claims are decided. Put another way, the rule only comes into play when the defendant’s liability is determined. Here, [the plaintiff's] liability to Fireside was determined.

.... I was really puzzled by the Supreme Court’s questions (or lack thereof). No one questioned Fireside’s counsel about its position that “the merits” of anything can’t be decided until after the class is certified; no one pointed out that the “rule” now applies only to the merits of class claims, not to the merits of any issue in the case, including the cross-complaint; no one asked about the conflict that Civil Code § 1781(c) seems to present in allowing class certification and “no merits” rulings in CLRA cases to be decided independent of each other or at the same time. Just a few questions about whether Fireside thought the case should be remanded to a different trial judge and why did the trial judge rule on the MJOP anyway??

After thinking about this ... , I conclude that the Court had already decided the case and didn’t feel like asking too many questions after its very active questioning in Balboa Island Village Inn v. Lemen, the first case argued.

Your point that defendants often agree to have the merits of class claims decided before class certification is well taken, and supported by authority. Here, you are correct that Fireside didn’t waive the “rule.” Rather, it asserted the rule at the same time it was withholding discovery necessary for the plaintiff to determine whether class certification was appropriate. (As the Ct of Appeal observed, delay is often the main defense tactic.) If the Supreme Court reverses, it will have to expand the “rule.” [Perhaps] the Court will note that the factual grounds of this case never presented an opportunity for one-way intervention; otherwise, in my opinion, defendants are likely to seize on any merits ruling in a case as critical to the class claims, and insist that the class be certified and notified before any merits issues can be decided.

This is quite interesting and adds another dimension to the argument. Many thanks again to the reader who took the trouble to write and share these thoughts.